Markit and Euroclear Bank have signed a memorandum of understanding (MoU) to jointly create operational infrastructure to support the use of loans as collateral in financing transactions.
In addition, both the firms intend to collaborate on introducing a series of other services to enhance transparency, automation and trade settlement for the European leveraged loan market.
Markit said it will provide loan pricing and other market data to make it possible for Euroclear Bank to extend its pool of collateral to include loans in triparty collateral management transactions.
The joint service, scheduled to be deployed in 2012, will increase refinancing possibilities for loan portfolios and diversify bank funding sources.
Euroclear managing director and head of product management Jo Van de Velde said that Euroclear Bank’s existing LoanReach and triparty collateral management services, together with Markit’s loan products, will expand the pools of collateral available to their clients by including a new asset class.